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China's anti-corruption campaign and firm productivity: Evidence from a quasi-natural experiment

Dongmin Kong, Yunqing Tao and Yanan Wang

China Economic Review, 2020, vol. 63, issue C

Abstract: We investigate the causal effects of the anti-corruption campaign on firm-level total factor productivity (TFP) in China. We employ a difference-in-differences estimation to show the following results. (1) The anti-corruption campaign substantially improves TFP by 1.7%. (2) Our findings are particularly pronounced in non-state-owned enterprises, in firms without political connections, and in regions with weak legal environment. (3) We find that the anti-corruption campaign increases the sensitivity of firm investment to investment opportunities and generates more patents, which reveals the importance of investment efficiency channel and innovation channel. This study provides clear policy implication to regulators by identifying firm-level evidence for rent-seeking theory.

Keywords: Anti-corruption campaign; Firm productivity; Investment efficiency; Innovation (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:63:y:2020:i:c:s1043951x20301322

DOI: 10.1016/j.chieco.2020.101535

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China Economic Review is currently edited by B.M. Fleisher, K. X. D. Huang, M.E. Lovely, Y. Wen, X. Zhang and X. Zhu

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